How to make sure the price is right

To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.

Published: August 23, 2014;Last modified: August 23, 2014 10:06PM

If you offer your home for sale this fall, would you be doing so in a market that favors sellers or buyers? That will depend heavily on the neighborhood where you live, the timing of your sale and intangible factors that even the most seasoned observers can’t predict — like buyers’ moods.

Since the financial collapse that brought down real estate more than a half-decade ago, many homeowners have been happy to see much — if not all — of their lost equity restored. Indeed, some neighborhoods have enjoyed sharply rising values in recent years. But in other neighborhoods, values are flattening or even slipping slightly.

This year, one factor that’s had a significant effect on home sales has been the tightening of federal regulations on mortgage lenders. These have made lenders more cautious about their underwriting practices, which in turn has made it harder for would-be buyers to qualify for home loans.

But other factors are improving the picture. In particular, the gradually improving employment rate has helped more young families move into homeownership.

“The housing market is currently in pretty decent shape throughout the country. But some pockets of weakness remain,” says Eric Tyson, a personal finance expert and co-author of “House Selling for Dummies.”

Because real estate values are so variable, it’s tough for would-be sellers to peg the right asking price for their property. To avoid guesswork, Tyson says there’s no substitute for a listing agent with an ear-to-the-ground knowledge of price trends in your immediate area.

Here are a few pointers for sellers:

Avoid overpricing like the plague.

Sid Davis, a real estate broker and author of “A Survival Guide to Selling a Home,” says that even in markets where the supply and demand for property are roughly in balance, buyers are very price-conscious.

As Davis notes, some home sellers want to “test drive” the market with a high price during the first couple of weeks of a listing, figuring they can simply cut the price later with no harm done. But he says that’s a mistake.

Seek a general idea on local values before engaging a listing agent.

There are now a number of websites that offer free and instantaneous assessments of home values. Among the best known are Zillow (zillow.com) and Trulia (trulia.com).

It’s unrealistic to look to such “fast pricing” sites for a definitive answer on the current worth of your place. After all, they typically rely heavily on publicly available data on recent home transactions. And some jurisdictions restrict or delay the release of such statistics. Still, Davis says such sites can be a good starting point.

Another way to gain a feel for prevailing prices prior to hiring an agent is to attend open houses in your neighborhood.

Interview multiple agents before engaging one.

When it comes time to sell, many homeowners instinctively turn to a friend or relative in the real estate business. But Tyson cautions against hiring someone in your inner circle — even if that person is an active agent in your neighborhood.

“We all want to hear how wonderful our house is and how much it’s worth. That makes it very hard for your friend or relative to recommend a realistic price tag,” Tyson says.

He says prospective home sellers should interview at least three agents working in their area before selecting one to list their home.

Review each agent’s track record on pricing.

Given that real estate markets are always subject to change, many sellers don’t receive their full asking price at the closing table. But if their property was marked accurately from the start, they should still come fairly close.

One way to assess an agent’s pricing capability is to look at a few key numbers that reflect his or her track record. If the agent is routinely making accurate price recommendations, there should be relatively little disparity between the original list price and the final closing price, Davis says.

He suggests you ask prospective listing agents to show you “list-to-sale” numbers for all the homes they’ve sold during the last 90 days.

Don’t let your pride get in the way of accurate pricing.

Some people assume that real estate agents are motivated to underprice with an eye to quick sales. But Davis says the greater risk is that they’ll recommend too high a price in hopes of flattering you into working with them.

“We call that ‘trying to buy a listing,’ ” he says.

Overpricing can be particularly costly to homeowners trying to sell in a community with an excess inventory of unsold properties. But it can also hurt sellers in an area with very few homes on the market.